NEW YORK (CNNMoney.com) -- Generic drug giant Barr Pharmaceuticals is trying to buy its way into the biogenerics industry.

But some analysts believe that Barr's biogenerics bid is too speculative, considering that the industry is in a fledging state.

Barr (down $0.14 to $53.98, Charts), based in Woodcliff Lake, N.J., raised its bid on Sept. 11 to buy the Croatian generic drug maker Pliva, which is traded on the London Stock Exchange. Barr has offered 820 kuna, or $141.63 per share or $2.5 billion in total, up from its previous offer of $2.3 billion.

This beats the offer from rival bidder Actavis, an Icelandic generic drug maker that is traded on the ICEX, or Icelandic stock exchange. Actavis has offered 795 kuna, or $137.30 per share, and has until Sept. 27 to raise its bid.

Pliva has the rare - or perhaps unique - ability to manufacture biogeneric drugs, which are generic versions of drugs made by biotechs. Biotech drugs are based on complex biological organisms, rather than simple molecular compounds like the more traditional pharmaceutical drugs, making them difficult to emulate. Biogenerics are not available in the U.S. or anywhere else, but the Food and Drug Administration is trying to establish a way of regulating them.

Although the biotech industry is younger than Big Pharma, its blockbuster's patents will soon start expiring, making the drugs available for generic imitation. Andrew Forman, analyst for WR Hambrecht, has estimated that $20 billion worth of biotech drugs could go generic by 2010, though the value would drop along with the price once those drugs lose their patents. Teva Pharmaceutical (down $0.24 to $35.15, Charts) Industries of Israel has bought plants in Mexico and Lithuania, apparently with the intention of producing biogenerics.

But the fact that the industry doesn't exist yet has some analysts doubting the move. In fact, the FDA has yet to develop a system for regulating the industry.

"Frankly, I don't think it's the best use of Barr's capital," said Ken Cacciatore, analyst for Cowen and Co.

In addition to getting access to Pliva's biogenerics facilities, Barr wants the low-cost manufacturing and tax advantages gained by doing business in Eastern Europe, said Cacciatore. But the analyst said the biogenerics industry is "still sometime away" and "there are better brand[-name] assets to be bought in the States."

"I understand the rationale; I just don't agree with it," said Cacciatore. "There could be better options and it's a bit disappointing that [Barr] didn't focus more on a branded acquisition in the States. The [biogenerics] regulatory pathway hasn't been created, it's costly and will take significant development skills, all of which will not be cured by the Pliva acquisition."

Robert Uhl, analyst for Friedman, Billings, Ramsey, listed the bidding war as a top risk to Barr investors.

"The proposed transaction is subject to antitrust and regulatory approval in several countries, which could delay or block the acquisition," wrote Uhl, in a note published Sept. 7, several days before Barr raised its bid. "Additionally, Barr may not be able to realize the potential synergies, product opportunities, and/or cost savings planned by management."

Carol Cox, a spokeswoman for Barr, said in an email that her company is working with Congress to get the FDA to publish guidance on how to submit applications for biogeneric drugs to the agency. Also, Cox said that Barr is developing a biogeneric drug in partnership with Pliva, in addition to trying to buy the company.

Will Actavis raise its bid? The company's CEO Robert Wessman wouldn't say.

"From a strategic standpoint [the merger] makes absolute sense," said Wessman, who said that his European company is well-equipped to market Pliva's products in Europe, as well as the U.S. "There is a limit for us in this deal, and there is a limit to what Barr can pay. We have not commented at all on what will be our next step."

Both of the bidders already have connections to Pliva. Actavis owns a minority share in Pliva. Barr signed an agreement with Pliva last year to co-develop a biogeneric drug that would stimulate the production of white blood cells.

Pliva has a market capitalization of $2.5 billion, which makes it the biggest drug maker in Eastern Europe. The company that buys Pliva would become the third-biggest generic drug maker in the world behind Teva and Swiss company Novartis (down $0.02 to $57.09, Charts), and would also compete with U.S. giants Pfizer (down $0.05 to $28.15, Charts) and Merck (up $0.16 to $41.19, Charts).

Missing the $20 billion biogeneric boom